I’ve been reading a lot of this lately:

The American Dream has been shattered. It used to be that a hard-working person could pretty much bank on getting a job after school. And if they worked hard at it, they knew they would make enough money to buy a home and support their family. They would have insurance, they would be able to provide the things the family needed, and they would be able to have a comfortable retirement. Now the housing bubble has burst, unemployment has spiked, and the American Dream no longer exists. It is gone.

Is that really the American Dream—that if you worked hard at your job you would pretty much have a guaranteed “decent” lifestyle with a comfortable retirement?

Because I always thought the American Dream was this notion that anything is possible. That if you work hard and give it your all, you might hit the jackpot and become very successful. I thought the American Dream was that notion of potential. Of possibility.

That it was possible, not guaranteed.

Nothing is guaranteed—regardless of how hard you work—except for the chance at living the good life. In other countries, a large swath of the population never even gets a lottery number—they don’t get to play. But that’s how I always viewed the American Dream: everyone has a shot at it, no matter what.

It got me thinking about old-school industries like the car industry. There used to be factory jobs where people showed up to work, put in their 30 years or whatever of hard work, and then were taken care of for life. Sweet retirement pensions meant that their future was guaranteed.

Now we know that this type of perk is unsustainable. That a company can’t carry all that shit on their books and stay profitable—it doesn’t make sense. This isn’t the death of the American Dream, it’s more like the awakening of reality. A pension sounds great and all, but to expect a guarantee like that seems unrealistic to me.

Maybe it’s because I’m from Guatemala. Nothing is guaranteed down there. You might have all your savings in a bank and then poof—turns out someone stole all the money and you’re never getting it back.

Ever.

Go to court to get it back? Please, you’re wasting your time. Press charges? Wasting your time and whatever money you have left.

Nothing is guaranteed down there. People work their asses off and they know that everything could be taken away tomorrow. It’s happened in past and that’s the shadow that everyone lives in. Everyone: rich, poor, middle class. Doesn’t matter.

That’s why Guatemalans save money, unlike Americans (until recently, anyway). They’re constantly worried about what might happen tomorrow so they save money or buy land—anything that might seem like a safer way to hold value.

There are no guarantees. It feels like this country is starting to get the gist of this idea and it’s a rude awakening.

But the American Dream? I don’t see that changing one bit…this is still the place where anyone can make it. Right now it’s just harder than it was before. But just because nothing is guaranteed, it doesn’t mean the dream doesn’t exist anymore.

This post was included in the MoneyCrashers Personal Finance Roundup.

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A couple weeks ago we noticed our brakes were making a weird sound, so we took it to two different shops. And we got two quotes, which is the responsible thing to do.

But what do you do when one comes back at $420 and the other at $3,500?

You take it to a third shop, which charged us $240 for the job.

I learned a lot about the right things to do (get as many estimates as you can) and what not to do (never take it to the dealership). On my way, I found 6 Sites Every Car Owner Needs to Bookmark Now.

The Problem With Car Repairs

Ignorance. Most of us don’t know a damn thing about cars, so we need to find someone we can trust. Otherwise we’ll feel like we’re getting ripped off, which we very well might be.

While we were debating all these different quotes and estimates, I decided I couldn’t take it anymore. I needed to educate myself so I didn’t have to rely so much on someone else telling me what was wrong with my car. I decided that I’m going to learn the basics of how cars work, their parts, and so on.

But who has time for that? Now that the car is fixed, guess what happened? I don’t feel the urge to pick up Car Repairs for Dummies anymore. The car works and that’s all I need to know.

My tips to you?

• Get as many estimates as you can.
• Visit Repairpal.com and get an estimate there.
• Check out Yelp and ask your friends on Facebook if they have a shop they trust.
• Go with the place you trust the most, it will make all the difference.
• Stay on top of your maintenance!

And if you don’t have a car, stay tuned for a piece that should be up soon on the different car-sharing services out there.

Image by Dr. Keats

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As its investment portfolio was losing nearly a quarter of its value, the country’s largest public pension fund doled out six-figure bonuses and substantial raises to its top employees, an analysis by The Associated Press has found.

That tone I was talking about? It’s trying to rile readers up by implying bonuses were handed out improperly because some people were getting paid while the fund lost “a quarter of its value.”

I’ll be honest: when I read that first line, I was ready to shake my head and start wagging my finger at yet another group of people that are getting paid even when they don’t deserve it. I was fired up. A few graphs down, the fire is stoked:

Virtually all of CalPERS’ investment managers were awarded bonuses of more than $10,000 each, with several earning bonuses of more than $100,000 during the 2008-09 fiscal year. The cash awards were distributed as the fund lost $59 billion.

But read the rest of the article and you’ll realize there isn’t much to get indignant over—the way CalPERS doles out bonuses is actually really smart and really fair. Another quote:

CalPERS spokesman Brad Pacheco said bonuses are based on the fund’s performance over five years, not just the year immediately preceding the bonus, in order to encourage managers to seek long-term investments rather than short-term gains.

Brilliant! This is one of those major criticisms of certain investment funds: they’re so focused on the short term that eventually they crash and burn because they were only paying attention to making the numbers for the next quarter, not the next five years.

And in this case it means they get decent bonuses because the performance of the fund over the past five years was pretty good, despite the recent meltdown. Seems fair to me, especially when the fund outperformed the S&P during that time:

The Standard & Poor’s 500 index declined by 14.8 percent in 2007-08 and 28.2 percent in 2008-09, while CalPERS’ overall value dropped by 5.1 percent and 24.8 percent respectively.

Give them their bonuses and stop complaining—they earned them!

P.S. This reminds me of the ING bonuses and how I felt they shouldn’t have to give them backAfter all, a contract is a contract, right?

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So if you make $200,000 or you’re a couple that makes more than $250,000, congratulations! You’re in the top 2% of earners in this country and that means you’re rich!

Unfortunately, that means the tax cuts won’t expire for you and you’re tax rate will go up to either 36% or 39.6% (from 33% and 35%).

This has been in the news a lot and apparently there is TONS of debate going on about Obama’s plan. As usual, it has to do with party lines. Democrats say that the national debt is so out of control that this needs to be done. Republican think that the tax cuts should be extended for everyone, even the top 2%. They say that small-business owners will be affected and the economy as a whole might lurch (even more) due to the tax increase.

And I just don’t get it: why is this such a big story when so few of us are impacted?

From the NY Times:

Analyses from the Joint Committee on Taxation and the Tax Policy Center, a nonpartisan research organization, show that less than 3 percent of filers with small-business income pay at the top two income tax rates, and many of those are doctors and lawyers in partnerships.

I’m not naive, I know that these types of studies and committees can be very biased, but even if that number is 10% or 20%, that still means that a small minority of Americans will have to pay more taxes. And not just higher taxes—just what they used to pay before the tax cuts were put into place. So it’s not like taxes are going up for them, they’re going back to where they were.

As you can tell, I don’t make anywhere near $200,000 (though I’m working on it), so it’s easy for me to dismiss this whole issue and act surprised that it’s such a big deal.

What I don’t understand is how this isn’t a much simpler issue. If you had Americans vote on it, I would expect this to be resolved rather quickly. Everyone that makes under $200,000/$250,000 would be like “yeah raise taxes, I don’t care” and that would be the end of it.

Right?

The government needs money to run itself and the national debt is getting out of control. We need more money so why not take it back from the people who have oodles of it in the first place?

Which way would you vote? I’m curious if people out there not making “rich” money would still vote to keep the tax cuts for the rich. If so, I want to hear from you. Why? Is it because you think you might get to that level at some point and don’t want to pay those taxes? Wouldn’t you be so thrilled to get to that tax bracket that you wouldn’t care about paying a little more in taxes? I remember when I moved up from the lowest tax bracket to the next lowest and I was all excited: more money meant more taxes, sure, but it still meant more money.

I really want to hear from people on this because my goal is to understand. If you’re going to spout Democrat/Republican party lines, please don’t bother me. If you want to try to explain it to me like I’m a five-year old, then please do because I’m stumped.

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It didn’t. Instead, I found myself focusing on the infamous speech Gordon Gekko gives to Bluestar stockholders:

Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms—greed for life, for money, for love, knowledge—has marked the upward surge of mankind.

It’s a very convincing piece of rhetoric, and it’s no wonder so many young people wound up wanting to become the next Gordon Gekko, which was the exact opposite of what director Oliver Stone was trying to accomplish with the movie.

Greed is Good

It is. Think about it: without greed you wouldn’t have any companies churning out new, exciting products. You wouldn’t have Pfizer pumping millions of dollars into researching new medicine that cures all kinds of diseases. They do it for the money—for profit—and we all get the benefit of feeling better/living longer.

For a price, of course.

There would be no Apple if it wasn’t for greed. Maybe Steve Jobs does actually have a more altruistic reason for pushing Apple as fas as its gone. Maybe it’s not about money, but he’s still greedy. He wants to be on the cutting edge of technology and design. He wants his products to be the sexiest. He wants to be in control.

That thirst to accomplish these things—it’s all one form or another of greed.

We Are All Greedy

With our time, with our money, with our freedom. Think about it these questions:

• Why do we want more money?
• Why do we want a promotion?
• Why do we want to pay as little as possible in taxes?
• Why do we want to leave work at 5pm on the dot every day (or earlier)?
• Why do we want to be our own boss?
• Why is there such a thing as “alone time?”

It’s all about greed—be it money, time, knowledge, or personal freedom. We want what we want and most of the time greed is the motivator.

Morality vs Greed

Nobody has ever gone to jail for greed. In the movie, Gekko and Bud Fox go to jail for breaking the law, not for being greedy. The key here is that greed didn’t drive them to break the law, it was their lack of morals. They were willing to break the rules in order to make more money, and that was their downfall.

But that’s not greed, that’s a lack of morals.

This is where most people get it wrong: they like rail on people like Gordon Gekko for being greedy and being “in it just for the money.” Well guess what? Without that inherent interest in the money, the world wouldn’t be where it is today.

Gekko was right on that: it has marked the upward surge of mankind.

And we should use that insatiable feeling of greed (for whatever it is you really really want) and turn it into a motivator.

Warren Buffett is Greedy

If there’s anyone in Wall Street (or just in the world of business) that is the anti-Gekko, it’s Warren Buffett. He’s known for being honest and anything he aligns himself with immediately benefits from his cachet. But guess what? Warren Buffett is greedier than most of us.

It’s why he pored over an ungodly amount of financial statements and annual reports in his life—he was looking for opportunities to make money. People like Warren Buffett don’t need any more money—but there he is still making deals left and right trying to get a proper return on his investment.

It may sound odd because we’re so used to using greed as a negative word. Instead, let’s use greed as a motivator to get us to contribute to this “upward surge of mankind.” And if that’s too much to ask for, then at least the upward surge of you.

Next time you feel guilty about spending too much time on something or trying to make more money or trying to make things better for yourself somehow—don’t. Accept the greed and use it to push you ahead and get things done.

And please don’t break the law.

This article was included in the Carnival of Financial Planning.

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This is a guest post by Greg McFarlane, an advertising copywriter who lives in Las Vegas and Lahaina— a testament to the power of entrepreneurship.

When is it OK not to pay a bill? (If you’re the Greek central bank, “Whenever it suits you.”)

Your humble poster automates whatever finances he can, setting and then forgetting the cable bill, the phone bill, the car payment etc. and freeing up time our ancestors would have spent reconciling statements and hoping that payments would post once checks had cleared.

Two weeks ago I received an email from…well, a company whose parent is based out of Cleveland and grosses $2 billion annually. I patronize this company only sporadically, but they make you buy an annual membership. Like a moron, I ignored the email’s unambiguous message that said my account would auto-renew within a week.

A week later, another email. From PayPal, saying my account had been debited.

(Aside: What’s more nerve-wracking than an email from PayPal? For me it usually means I spent money for some legitimate purpose, sometime in the previous month, couldn’t recall what I bought and am only remembering it now.)

I’d automatically re-upped with the Cleveland company and was now on the hook for another 363 days. The price of the membership is nominal, but I shouldn’t spend money on something I can’t justify.

I called the company and spoke with its Interactive Voice Responder. “So you wish to cancel your membership? Please say ‘cancel.’ Thank you.” She confirmed my cancellation, but I still had to plead my case to a human to get the charges reversed.

Once I got a real person on the line, I got creatively dishonest and explained that I was out of the country and had left the job of cancelling my membership to my girlfriend. (Because when you have to get something done, it’s always smart to wait until the last minute and put someone else in charge of it while you’re thousands of miles away.) And, as long as I was weaving fiction out of the ether, I mentioned that my girlfriend happens to have a thick Czech accent. (More lying.) And, on the day before the account was set to auto-renew, she attempted to cancel via the… Interactive Voice Responder. Yeah, that’s it. But she couldn’t, because…it couldn’t discern her heavily accented English.

(Editor’s note: lying is wrong and everything…but this is pretty funny)

I felt dirty doing this, especially when the customer service person bought my story without question. I didn’t have to defend my ridiculous charade even slightly, which left me wondering whether she was naïve or just couldn’t be bothered to treat me with the skepticism I deserved.

If you’re persistent, polite, and apologetic, you can weasel your way out of minor charges like this. Which gives you a second chance to use the money you thus recovered to buy assets and sell liabilities with. (Note: This method will not work with the IRS or almost any other federal government agency.) But it does bring up an ethical question: How wrong is this? There are degrees.

Did I receive a service and fail to pay for it?

No, unless you consider the 1½ days of membership that I received but didn’t use to be a “service”. Extrapolating from the company’s annual dues, I owe them about 6¢. Having me on the membership rolls for that period cost them a small fraction of that.

How big a deal are we talking about?

Using the traditional scorekeeping method of dollars and cents, almost nothing.

What burden am I putting on the other party?

6¢ divided by all that company’s employees? I’d have cost them more money if I’d shown up at corporate headquarters and asked to use the bathroom.

Is there a pattern?

No. I learned my lesson. Once was enough.

Social convention dictates that we honor certain legal obligations and ignore others. Making the payments on your car falls into the former category—you can’t be surprised if your car with delinquent payments gets repossessed. Paying your mortgage used to fall in that category, at least before 2007. On the other hand, driving 4 miles an hour over the posted speed limit to keep up with traffic is hardly the kind of thing you should feel guilty about doing.

So is there a special circle of Hades reserved for deadbeats like me, or have I committed the equivalent of removing the tag from a mattress I don’t own?

Greg recently wrote Control Your Cash: Making Money Make Sense, a financial primer for people in their 20s and 30s who know nothing about money. Buy the book here (physical) or here (Kindle) and reach Greg at greg@ControlYourCash.com.

Image by neogabox

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After all, aren’t you giving too much of your money away by doing it?

I am no longer asking myself this question—the answer is obvious: customer loyalty. Take a look at the comments from that post and you’ll see how much people love BBB. They give their workers the power to keep customers happy, and that is something most companies won’t do.

The other day I went back and returned another Wok. They gave me a new one with no questions asked.

Then our year-and-a-half old coffee pot broke and we took that back too. They let us pick out a new one of equal value…no hassles.

The Grill Story

But here’s the thing that truly converted me: M and I wanted to buy a grill for the tiny bit of outdoor space that we have, so we bought a Weber Q. Bought it on Amazon but then bought the cart and the cover off of Bed Bad & Beyond’s website because we had a gift card that we needed to use (and the store didn’t have these items in stock).

Then after reading some surprising things online about the Bed Bath & Beyond policy, I did the following:

• Printed out my online receipt of the purchase of the stand and the cover
• Grabbed two 20% coupons
• Went to my local store to ask for the 20% off from the two items I’d bought online

The response?

No problem, I can help you out with that today.

That’s customers service and that’s the way to create a legion of loyal customers.

And that’s how Bed Bath & Beyond not only stays in business but thrives in business. More companies should take a look at the passionate customer base Bed Bath & Beyond has created and take a few pointers.

For more on customer service, check out Wisebread’s 10 Examples of Shockingly Excellent Customer Service

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If you thought a bad credit score could “only” affect the interest rate you get on a loan, you’re wrong. Here’s the write up from Liz Pulliam Weston on a study about how employers are using credit scores to fire people. The craziest part about it is that it’s illegal and some employers don’t seem to realize it:

Twenty-five percent acknowledged that a bankruptcy on an applicant’s credit report would most likely result in a decision not to make a job offer. Here’s the problem: Using a bankruptcy as a decision not to hire (or to fire or to refuse a promotion) is illegal under federal law.

I would love to have seen the HR manager’s face when confronted with that nugget of information, “Oh….ummm, that’s not good.”

I don’t really care one way or the other if an employer is using a credit score to make a decision about me (it can only help someone like me). Of course, if it’s illegal they shouldn’t do it. But for everyone else out there with a mediocre or bad credit number—this should make you really paranoid.

In a good way.

You should use this as motivation to clean up your score. To pay your bills on time. To stop carrying a balance on your credit card. To start taking control of your finances. If higher interest rates and higher fees don’t motivate you enough, think of your dream job being handed to you and then being taken away because you really wanted that Playstation 3 you couldn’t afford.

Is it really worth it?

I’m curious to hear if people think this is unethical or not. Aren’t employers simply covering themselves and trying to gather as much information on a hire before committing to them? Share your thoughts in the comments!

This post was included in the Carnival of Financial Planning over at CashMoneyLife.

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There were so many things happening at the same time, it was tough to keep track:

• Presumably, they were there to discuss the SEC charges against Goldman, which they sometimes hit on
• The senators were there to look good in front of the media as they wagged their fingers at Wall Street
• Goldman was there to take the fall for the mortgage crisis, which it did not cause
• The Goldman guys were there to not look stupid and protect the firm

Why is this so interesting? Because both the Senators and the Goldman guys are really smart dudes—but the Senators (as one admitted) don’t have the capacity to really understand all the details of how all this stuff worked. It’s not easy. They did their homework the night before, read all the papers and books (including The Big Short!), and then went out there to wag their fingers in Goldman’s face.

Why? Because they represent the people, and the people are angry. They’re angry about massive job losses, angry about their 401(k) losing so much of its value, angry that CEOs were making money hand over fist even though they messed up big time with the bets they took in the mortgage industry.

And the use of that word—bets—was in full effect during the hearings. The senators made a point to compare what Goldman did to a casino that stacked the odds against everyone else and then sat back to collect the money. Which is oversimplifying A LOT of what happened and is also wrong. The senators acted as if Goldman knew what was going to happen in the future and then acted illegally (or at least immorally) to reap massive profits from that information.

Some of the questions they asked Goldman were astounding. Senator McCain asked the Goldman CEO what he thought about community banks being in so much trouble. He asked him how much he got as a bonus last year ($9 million), and he asked him what he felt about the American people being in such a tough spot right now. Then he threw out something like “But you’re doing pretty well, aren’t you?”

What the hell does that have to do with anything? Absolutely nothing, and that’s why yesterday was so interesting. This was the biggest economic collapse in the history of this country since the Great Depression, and someone has to take the blame. And if you watched yesterday, it’s clear who Congress wants to point the finger at—Goldman Sachs. The people need a villain, and right not it looks like it’s going to be Goldman Sachs.

You Can’t Handle the Truth

Senator Coburn then chimed in with something I thought was pretty brave: he pointed out that 90% of the mess was Congress’ fault—they only hold these hearings retroactively, never before something bad happens. Bravo to you Senator Coburn: amidst the bashing and blaming of Goldman, you came out and spoke honestly instead of just piling it on some more.

It was quite the show.

But is any of it right? Did Goldman Sachs do anything wrong? After all, that’s the point of the SEC charges—that Goldman broke the law by creating a product that one client believed was “built to fail” while selling it to other clients.

I don’t see the conflict of interest. First of all, Goldman had no way of knowing what was going to happen. As we saw in The Big Short, some people were pretty sure that certain tranches of mortgage securities were going to blow up. But no one knew for sure. And even if they believed that these products were going to fail, is it their job to stop others from exposing themselves to the risk they’re looking for? Should Scottrade stop me from buying a stock because it “knows” or “think” it’s a shitty stock?

I don’t think so. I think if an institution or person wants to buy X or Y security from Goldman, Goldman’s job is to sell them the security.

No one knew exactly what was going to happen—including Goldman.

I am Not a Goldman Apologist

Let me get this straight—if it’s illegal to do what Goldman did (I don’t really know, but it doesn’t sound like it should be), they should be punished. Reform needs to happen. But what I don’t like is when people lay blame or make up their mind without knowing all the facts. And that’s what makes this so tricky—I bet 70% of the population can’t really understand (and doesn’t really care to understand) what happened, how it happened, and how to fix the problem.

All they have to do is read The Big Short and you’d get an entertaining, in-depth view of the crisis and how it blew the economy up. Goldman had some to do with it, but that was after lenders were giving out irresponsible mortgages to irresponsible buyers. I get very frustrated and upset when these knee-jerk reactions and decisions are made:

• Goldman made money of the crisis (they lost a ton too) and so therefore they are evil.
• The CEO got a $9 million bonus and so he did something wrong.
• Money is evil.

We’re not idealistic teenagers anymore that have these short-sighted opinions about the world. We should dig a little deeper and try to learn what the root cause of all this was. It was irresponsibility. It was lack of proper oversight. It was leverage. It was greed.

But if you’re going to put everyone that falls under those categories on the stand, it’s going to be one hell of a long hearing.

Anyway, there are hours and hours of video on this out there, but here is a clip of Goldman CEO Lloyd Blankfein on the “stand:”

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And I’m not real good under pressure like that, so I didn’t buy it.

But he made such a good impression on me, that I cruised the other products he has up in his store and found something else I liked: Create Your Own Freedom: Break Out of the 9–5. He does such a good job of presenting his products in an attractive, honest way, that I was immediately drawn to this guide. It didn’t take me long to dig in and buy it (click here to use my affiliate link and I’ll get a cut of the purchase price if you buy anything from him). I’ll be doing a full review later on but for now I wanted to share my own thoughts on creating a product like Chris’ and whether there is enough interest out there for it.

I’m thinking of creating a “How to Make More Money” guide/ebook. The guide will focus on the strategies you can execute to make more money in your life as a salaried employee. Sorry it won’t be as exciting as “busting out of the 9–5 grind” or “making money while drinking daiquiris on the beach,” but there is a reason for it: most people out there don’t want to do it. Most people just want to take their existing situation and make it better. Or they want to get a new job that pays better and is more satisfying at the same time. Starting a business is not for everyone.

Here is what the guide won’t be about:

• Tips and tricks to make money on the side
• Strategies to save more of the money you already make
• Making money by investing in stocks
• Making money by storing money in high-yield savings accounts

Anyway, I’d love some feedback on this. Is this of any interest to you? Would you like to know how to up your pay at your current job or read about the different things you can do to set yourself up for a higher-paying job at a new place? Shoot me an email or use the fancy new contact form I added here.

I’m very eager to hear what you all have to say.

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